Eurex Clearing has presented a central clearing solution for credit derivatives at the invitation of the Federal Reserve Bank in New York, with the support of the Deutsche Bundesbank, which backs a European central clearing solution for OTC credit derivatives in order to enhance the soundness and stability of European financial markets.

Eurex intends to build a consortium structure to provide shared governance and control. Eurex already offers a ready-to-use solution for iTraxx index contracts, as well as certain single name credit default swap products. CDX contracts will be added, subject to the signing of a licensing arrangement with Markit.

In the first half of 2009, this offering will be complemented by an OTC clearing solution for International Swaps and Derivatives Association-documented credit derivatives. The Eurex Clearing solution will be directly linked into the existing data warehouse infrastructure.

'Eurex and Eurex Clearing firmly believe that central clearing services are the most suitable option to effectively mitigate existing counterparty risk in OTC credit markets and improve market transparency,' says Thomas Book, a member of the Eurex executive board responsible for clearing.

'Both elements are key to a sustainable reduction of systemic risk in credit markets on a global scale. Eurex Clearing's central counterparty clearing model has proven resilient and robust for listed futures and options products, especially during the recent turbulence in the financial markets.'


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